Sugna Sponge & Power Private Limited Vs Superintendent of Central Tax (Andhra Pradesh High Court)
Andhra Pradesh High Court held that rule 86A of the Central Goods and Services Tax Rules permits blocking of credit which has been wrongfully utilized, whether it is actually available in the credit ledger or not. Thus, writ petition dismissed.
Facts- The petitioner, who is registered, under the Goods and Services Tax Act 2017 had been paying its taxes, either by way of payment of cash or by utilizing the input tax credit, which is available in its electronic credit ledger. The 2nd respondent had blocked the electronic credit ledger of the petitioner to an extent of Rs.19,73,299/-, by invoking Rule-86A of the Central Goods & Services Tax Rules, 2017. This action of the 2nd respondent is challenged by the Writ Petitioner, on various grounds.
Conclusion- A plain reading of the rule, permits the authority not to allow debit or refund of an amount equivalent to “such credit”. This part of the Rule does not use the term, “such credit which is available”. The language is restricted to “such credit”. The term “such credit” can only mean the credit which has been created, wrongfully, by any of the means set out in sub-clauses (a) to (d) of Rule 86A (1). We are unable to accept the interpretation that the term “such credit” means the credit which is actually available in the credit ledger.
